Archive for June, 2014

In Alice Corporation PTY. Ltd. v. CLS Bank International, et al, handed down on June 19, 2014, the U.S. Supreme Court held the Alice claims invalid under 35 U.S.C. § 101, using the two-step test for determining patent statutory subject matter set forth in the Court’s 2012 decision, Mayo Collaborative Ser­vices v. Prometheus Laboratories, Inc., 566 U. S. ___, ___. One first determines whether the claim recites non-statutory subject matter such as an abstract idea. If it does, then one “determines whether it contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.”

In applying the second step to the method claims in Alice, the Court stated:

Viewed as a whole, these method claims simply recite the concept of intermediated settlement as performed by a generic computer. They do not, for example, purport to improve the function­ing of the computer itself or effect an improvement in any other tech­nology or technical field. An instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer is not “enough” to transform the abstract idea into a patent-eligible invention.

Many software patent applications include a flowchart of the inventive concept and a block diagram of a computer system. Several pages of detail describing the computer system are often included in the written description. Claims are then directed to the inventive concept outlined in the flowchart as an operation of the disclosed computer system. Software applications so drafted and claimed appear to be considerably more than the “unspecified, generic computer” in the above quotation from Alice. However, one cannot be certain of the validity of patents issuing on this type of patent application until one of the patents is ultimately litigated. A large number of patents may depend on that ultimate litigation.

Additional disclosure to that outlined above may help insure that claims directed to software meet section 101 after Alice. One view of computer software patents is that the above flowchart amounts to an improvement in the function of the disclosed general purpose computer. Consequently the patent application drafter might consider also including in software patent applications an additional figure of hardware logic design that discloses a hardware implementation of the flowchart.

On June 25, 2014 the USPTO issued “Preliminary Examination Instructions in view of the Supreme Court Decision in Alice Corporation PTY. Ltd. v. CLS Bank International, et al (the “Instructions”).” In addressing the above second step, the Instructions state:

If an abstract idea is present in the claim, determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the abstract idea itself. In other words, are there other limitations in the claim that show a patent-eligible application of the abstract idea, e.g., more than a mere instruction to apply the abstract idea? Consider the claim as a whole by considering all claim elements, both individually and in combination.

Limitations referenced in Alice Corp. that may be enough to qualify as “significantly more” when recited in a claim with an abstract idea include, as non-limiting or non-exclusive examples:

Improvements to another technology or technical fields;

Improvements to the functioning of the computer itself;

Meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment

The hardware logic design figure suggested above may be viewed as a limitation that qualifies as “significantly more” since it is an “improvement[s] to the functioning of the computer itself” as in the above quotation from the Instructions.

Moreover, the current law allows patent applicants to claim the operation of an apparatus as a method. Method claims drawn to the suggested hardware figure should be given breadth to cover a general purpose computer programmed to operate as the hardware logic diagram. The Beauregard and system claims should likewise be given similar breadth.

In Alice Corp. v. CLS Bank Int’l (2014), the Supreme Court unanimously affirmed the one-paragraph per curium opinion of the en banc Federal Circuit, which found all claims of U.S. Patent Nos. 5,970,479, 6,912,510, 7,149,720, and 7,725,375 invalid under 35 U.S.C. § 101 for being directed to an abstract idea.

The Court based its affirmance on an application of a two-step process outlined in Mayo Collaborative Services v. Prometheus Labs, 566 U.S. ___ (2012). The first step is the determination of whether the claims are directed to a patent-ineligible concept such as a law of nature, natural phenomenon, or abstract idea. This step implicitly includes the identification of the concept at issue. The second step is to determine if the claims recite “an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.”

The Court avoided providing “the precise contours of the ‘abstract ideas’ category” by relying on the similarity between Alice’s claims for intermediated settlement and Bilski’s claims for hedging. The Court characterized the Bilski claims as “a method of organizing human activity.” Accordingly, while only three justices signed Justice Sotomayor’s concurrence, stating that “any claim that merely describes a method of doing business does not qualify as a ‘process’ under §101,” the unanimous decision does implicate business methods as likely directed to abstract ideas.
At the Federal Circuit, the splintered opinion included a four-judge dissent that argued that the system claims should be patent-eligible even though the method claims were not. The Supreme Court disagreed with this view, finding that if the system claims were treated differently under §101, “an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept” which would “make the determination of patent eligibility depend simply on the draftsman’s art.” To convey patent-eligibility, the claims at issue must be “significantly more than an instruction to apply the abstract idea … using some unspecified, generic computer.”

In my previous post regarding the oral argument before the Supreme Court, I noted that the Court seemed to be looking for reasonable and clear rules regarding the limits of the abstract idea exception to patentable subject matter, but did not get such a rule from any party. Perhaps as a result, this case was decided purely on its similarity to Bilski, and without providing much guidance as to the scope of the exception.

My congratulations to Russ Slifer, the new Regional Director of the USPTO’s Denver office. I have known Russ since he started his career in patent law in 1994 at the Schwegman firm, and followed his career through his private practice representing several of America’s top high technology companies, to his many years as Chief Patent Counsel for Micron. The USPTO is fortunate to have gained Russ for their leadership team. He has always demonstrated a mastery of his craft, is amazingly productive, shows sound judgement in all his affairs, is a progressive manager, and has been a leader in every aspect of his professional life. No doubt he will provide Michelle Lee and the USPTO a strong leader for the Denver office, continue to help the Office evolve and adapt to the ever changing needs of industry and policy, and get things done. Once again, my congratulations to Russ and the USPTO.